Employment Update, Czech Republic – February 2009

The Czech Republic has a mandatory health insurance to which both employees and employers contribute. When an employee is deemed by a medical doctor to be temporarily incapable of work for health reasons, he is compensated from the insurance fund. Until 1 January 2009 the insurance fund paid out 60% of an employee’s average earnings, from the 1st day of absence, for up to 1 year. In 2007 the average length of absence due to ill health was 34.8 days.

New legislation

As of 1 January 2009 the scheme has changed. It is structured with regard to the length of absence, so that resources are preserved for those with a long-term illness. The insurance fund monies are not payable unless the absence lasts longer than 14 days. The burden of compensation before the 15th day of absence shifts to employers.

From now on, an employee who is temporarily incapable of work receives no compensation for the first 3 working days of their absence, and 25 % of their average earnings in cases of quarantine [1]. From the 4th to the 14th day of the absence the employer pays sick pay at a level of 60% of the employee’s average earnings per working day. The employer may agree to pay more, and/or to pay sick pay for the first 3 days of absence as well, but the compensation should not exceed 100% of the average earnings. The sick pay may be cut by 50 % if the employee’s absence was caused by his or her intentional involvement in a fight, or by abuse of alcohol or drugs, or if it occurred in the course of criminal activity or other offence.The insurance fund monies apply from the 15th day of the employee’s absence, up to the 380th day of absence. The amount of sick pay varies depending on the length of absence. It is 60% of the daily rate [2] per day up to the 30th day of the absence, 66% from the 31st day to 60th day, and 72% from the 61st day on. There is an exception for fire fighters whose absence is caused in the course of their duties, attending to an emergency situation: they will receive 100% of their daily rate. After the 15th day the employer is not obliged to pay any sick pay.

Effect on employers

This legislation amendment bears heavily on employers who are now obliged to pay sick pay to employees up to the 14th day of their absence. This may present a significant financial burden for employers which did not previously exist.

[1] "Quarantine" is defined as the isolation of a healthy individual who was exposed to an infectious illness during the incubation period, or stayed in the centre point of the infection, from all other individuals, and medical examination of such an individual to prevent the spread of the infection.

[2] The law sets out in detail how to count the daily rate but for the purposes of this article the daily rate is an average daily gross wage after tax deductions counted for the 12 months preceding the month in which the temporary working incapability or quarantine started.

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